Weekly Bearish Signal
Last Friday, gold experienced a significant drop after reaching a new record high of 2,484, indicating aggressive selling. With today’s failure to sustain the upward momentum, the likelihood of a continued bearish retracement increases. Additionally, a bearish signal was triggered this week as gold dipped below last week’s low of 2,394. If the price falls below 2,384, it aligns with the bearish weekly breakdown, setting targets for lower prices.
ABCD Pattern Targets 2,332
Examining the previous retracements in gold, it is observed that each one formed a descending ABCD pattern before completing the retracement. The possibility of the current retracement following the same pattern before a bullish reversal occurs is plausible. Historically, retracements have occurred after gold reached new record highs. If the current retracement continues and breaks below 2,384, gold is likely to test lower price levels.
Today’s minor swing high could potentially complete an ABCD pattern on the chart, indicating a lower target for gold at 2,332. This level would place gold below its 20-Day and 50-Day Moving Averages, but still above key support levels at recent lows of 2,294 and 2,277. There is a chance for another rally to test resistance levels before gold falls to a new retracement low, which could lead to adjustments to the C point of the ABCD pattern.
Larger Picture Monthly View Remains Bullish
Despite the current retracement, the monthly chart of gold shows a bullish reversal this month, supporting a potential move towards new record highs in the future. Monitoring the low of the month is crucial, as a break below 2,318 would trigger a monthly bearish reversal. As long as gold stays above 2,318, there is a possibility for a rally to challenge recent highs once the correction phase is complete.
For a comprehensive overview of today’s economic events, refer to our economic calendar.
Additional Insight: It is important to consider both short-term technical indicators, like the ABCD pattern, and longer-term trends, such as the monthly chart, when analyzing the trajectory of gold prices. By combining these perspectives, traders can make more informed decisions regarding their trading strategies.
